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Debtors' Proposed Disclosure Statement Case 17-41681 Doc 102 Filed 12/27/17 Entered 12/27/17 19:06:43 Desc Main Document Page 1 of 154 UNITED STATES BANKRUPTCY COURT DISTRICT OF MINNESOTA In re: Chapter 11 CROSIER FATHERS AND BROTHERS PROVINCE, INC., a Minnesota non-profit Case No. 17-41681 corporation, Debtor. In re: Case No. 17-41682 CROSIER FATHERS OF ONAMIA, a Minnesota non-profit corporation, Debtor. In re: Case No. 17-41683 THE CROSIER COMMUNITY OF PHOENIX, an Arizona non-profit corporation, Debtor. DISCLOSURE STATEMENT TO ACCOMPANY JOINT PLAN OF REORGANIZATION DATED DECEMBER 22, 2017 QB\49997751.1 Case 17-41681 Doc 102 Filed 12/27/17 Entered 12/27/17 19:06:43 Desc Main Document Page 2 of 154 TABLE OF CONTENTS I. INTRODUCTION. ................................................................................................................ 1 II. INFORMATION ABOUT DISCLOSURE STATEMENT AND PLAN CONFIRMATION PROCESS. ................................................................................................... 2 A. Definitions and Plan Supremacy. ..................................................................................... 2 B. Limited Representations. .................................................................................................. 2 C. Voting Procedures. ............................................................................................................. 4 III. OVERVIEW OF PLAN. ...................................................................................................... 6 IV. THE DEBTORS. ................................................................................................................... 7 A. History of the Debtors and the PSO. ................................................................................ 7 B. Mission and Ministry. ........................................................................................................ 8 C. Structure and Business Operations. ................................................................................. 8 D. The Debtors’ Assets. ........................................................................................................ 11 1. Real Property. ............................................................................................................... 11 2. Cash and Investments. ................................................................................................. 13 3. Personal Property. ........................................................................................................ 13 4. Inventory. ...................................................................................................................... 14 5. Onamia Assisted Living Non-Profit Membership. .................................................... 14 6. Restricted Beneficial Interest In Hutzell Trust. ........................................................ 14 7. Restricted STTK Funds. .............................................................................................. 14 8. Discussion of Avoidance Actions. ................................................................................ 15 E. The Debtors’ Liabilities. .................................................................................................. 15 1. Tort Claims. .................................................................................................................. 15 2. Annuities. ...................................................................................................................... 15 3. Robinson Secured Claim. ............................................................................................ 15 4. Employee Claims. ......................................................................................................... 16 5. Trade Debt and Other Unsecured Claims. ................................................................ 16 V. SIGNIFICANT EVENTS PRIOR TO THE REORGANIZATION CASE. ................. 16 A. Abuse Perpetrated By Certain Crosiers. ....................................................................... 16 B. PSO Response To Abuse. ................................................................................................ 16 C. Tort Lawsuits. .................................................................................................................. 18 D. Hartford Declaratory Judgment Action. ....................................................................... 20 VI. CHAPTER 11 FILINGS..................................................................................................... 21 -i- QB\49997751.1 Case 17-41681 Doc 102 Filed 12/27/17 Entered 12/27/17 19:06:43 Desc Main Document Page 3 of 154 A. First Day Motions. ........................................................................................................... 21 B. Schedules & Statements. ................................................................................................. 23 C. Claims Bar Date and Notice. ........................................................................................... 23 D. Formation of Official Committee of Unsecured Creditors. ......................................... 24 E. Executory Contracts. ....................................................................................................... 24 F. Sales of Property. ............................................................................................................. 24 VII. ANTICIPATED CHAPTER 11 EVENTS. .................................................................... 24 A. Removal of State Court Cases. ....................................................................................... 24 B. Plan Confirmation. .......................................................................................................... 25 C. Fee Applications. .............................................................................................................. 25 VIII. DESCRIPTION OF PLAN AND MEANS FOR EXECUTION.................................. 25 A. Claims Description and Treatment. ............................................................................... 25 B. Unclassified Claims. ......................................................................................................... 26 C. Classified Claims. ............................................................................................................. 27 1. Class 1 – Priority Employee Unsecured Claims (Unimpaired; Not Entitled to Vote; Deemed to Accept). ............................................................................................................. 27 2. Class 2 – Prepetition Date Secured Tax Claims (Impaired; Entitled to Vote). ...... 27 3. Class 3 – Secured Claim of Robinsons (Impaired; Entitled to Vote). ..................... 28 4. Class 4 – General Unsecured Convenience Claims (Impaired; Entitled to Vote). 29 5. Class 5 – General Unsecured Claims (Impaired; Entitled to Vote). ........................ 29 6. Class 6 – Other Tort and Employee Claims (Impaired; Entitled to Vote). ............ 30 7. Class 7 – Annuity Claims (Unimpaired; Not Entitled to Vote). ............................... 30 8. Class 8 - Tort Claims (Impaired; Entitled to Vote)................................................... 30 9. Class 9 – Unknown Tort Claims (Impaired; Entitled to Vote). ............................... 33 10. Class 10 – Co-Defendant, Diocese, and Parish Claims (Impaired; Not Entitled to Vote—Deemed to Reject). .................................................................................................. 35 11. Class 11 - Insurance and Benefit Claims (Unimpaired; Not Entitled to Vote). .. 35 12. Class 12 – Penalty Claims (Impaired; Not Entitled to Vote—Deemed to Reject). 35 13. Class 13 - Intercompany Claims (Impaired; Entitled to Vote—Insiders) ........... 36 IX. MEANS FOR PLAN IMPLEMENTATION. ................................................................... 36 A. Establishment of Trust Account. .................................................................................... 36 1. Debtors’ Funding............................................................................................................ 36 2. Hartford Funding. ........................................................................................................... 36 B. Establishment of Disputed Claims Reserve. .................................................................. 36 -ii- QB\49997751.1 Case 17-41681 Doc 102 Filed 12/27/17 Entered 12/27/17 19:06:43 Desc Main Document Page 4 of 154 C. Establishment of Administrative Claims Reserve. ....................................................... 36 D. Payment and Treatment of Claims Other Than Tort Claims and Unknown Tort Claims....................................................................................................................................... 37 E. Retained Claims. .............................................................................................................. 37 F. Hartford Agreement and 363 Sale. ................................................................................. 37 X. CONDITIONS PRECEDENT TO EFFECTIVE DATE. ............................................... 38 A. Conditions Precedent. ...................................................................................................... 38 B. Waiver of Conditions. ...................................................................................................... 39 C. Closing. .............................................................................................................................
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